Will IPOs continue to flourish in 2018? Challenges to face ahead!

Looking at the record breaking number of IPOs in the fiscal year 2017-18 we were just wondering what shall be their status in the year 2018. The resilient Indian economy despite big moves like demonetisation and GST saw a booming IPO market. It has been a spectacular year for the Indian IPO market, Initial Public Offerings (IPOs) touched a new milestone and the overall picture remained very impressive.

Challenges for 2018’s IPOs in trading market

Setting a record high, as much as Rs. 84,357 crores has been raised from mainline IPOs (BSE and NSE) in the calendar year 2017-18. This includes issuances from diversified sectors dominated by infrastructure, banking, financial services, insurance (BFSI), transport and media etc. While in 2016-17, the total amount raised through IPO’s was Rs.29,104 crores only. Now, one can well realise the tremendous growth in this segment over the past year. Isn’t that just amazing?

Indian IPO’s are at full throttle as the share market has started this New Year with a flourish. Rise in IPO’s definitely present a great and efficient move for businesses and corporates.

What’s going to be the scenario in the upcoming months? Will the share markets remain to prosper? What are the crucial factors that influence the performance of IPOs in India? What are the numerous challenges faced by an IPO market to flourish?

IPOs or Initial Public Offering are usually offered by new and medium sized companies who need funds to grow and expand their business. But, it’s not that easy to grab a good amount of money. You have to face a set of challenges and overcome them to build your name in the share market.

Demand of Capital by Companies: IPO is a source to raise money for expansion in any company. To sight a robust market, the rising need for capex is really vital.

Contribution of New listings to Indian market cap: The performance of Companies listed in recent years shall also play a major role in determining the future trends in the IPO market.

Correlation between Subscription and Returns on listing day: The IPO issues having a good market reputation have brighter chances of outperformance. An oversubscribed issue displays a high demand for shares than its supply. So, this investor behaviour impacts the share prices and the overall market.

Now, you got a brief idea about the driving factors of an IPO market and how a slight change can have a huge impact on these market activities.

IPOs in India: Main Sectors to Look for in 2018

While considering a number of factors around, one can expect a primary market action in the following sectors in the year 2018 and beyond:

Defence units in Government sector

Public sector railway stocks

Hotels

Telecom

Real-estate

Chemicals

Logistics

Non-Banking Finance Companies (NBFCs)

The BFSI sector is also expected to continue its IPO fundraising spree in 2018 as well. While the number of IPOs might remain similar but the deal size and quantum of fundraise is likely to go up this year.

IPO’s in 2018: Who next?

No doubt, big and popular companies have been the very essence of the IPO market. But, with the changing trends and investor’s attitudes in India, the start-ups also seem to be instrumental in lending a different colour to India’s IPO Street in 2018.

IPO remains to be the gold standard of recognition for a large and successful company. However, recently various Indian start-ups are also paving their way to go public and take the IPO route. We can already feel the Indian internet IPO and Fintech wave all set to revolutionise the Indian share market in the coming days.

Analysts and experts are very optimistic on the IPO market provided the equity markets remain supportive. Let’s wait for the actual results, till then just keep a constant eye on the Indian IPO market!

All the investors out there, stay tuned and get ready to explore a mixed and wide variety of IPOs to choose from in 2018. IPO listing is an eye-catching proposition for the potential investors. But, not all IPO’s shall provide you the desired profitable returns. You need to catch up the right one to earn good profits.

Being a share market investor you need to be cautious and check the company’s background, its future road map and go through the fine prints before actually investing. It’s always advisable to be well versed and do a thorough evaluation of the Company’s financial performance before taking a wise investment decision.

The pace of Indian IPO market looks quite strong. What’s your opinion on the growing IPO market in India? Will it continue to flourish or will it tumble down owing to different internal and external factors? Feel free to discuss your valuable feedback and follow up for any queries thereon.